SCM7. Please answer all parts of the question. Thank you.
Al De Niro, the owner of Padria Inc., is a major distributor of a famous new model of a high-end sunglass, which is procured from Italy. Sunglasses are purchased from the manufacturer in Italy at the beginning of the season and are stocked and distributed to the regional department stores at the two warehouses in New York and Los Angeles. Currently, each warehouse operates independently and controls its own stocking decisions. At the end of the season, unsold sunglasses in each outlet are sold to the local discount stores at a deep discount. Consider the following situation regarding a sunglass, which is expected to be in high demand for the upcoming season: Assuming that demand at both markets is Normal, a) Find the optimal quantities to be allocated at each warehouse and the overall average total profit for the season associated with this operation. b) Instead of stocking in two locations, Al is considering stocking this sunglass in only one location, the warehouse in Chicago and satisfy demands for Los Angeles and New York. However, since the sold sunglasses must be shipped from Chicago, the unit transportation cost will increase by an average of $5 per sunglass. Assuming that demands in the two markets are independent, calculate the optimal order quantity for the sunglass and the average total profit for the season associated with this operation. Based on your analysis, should James take this action? c) Which concept of supply chain management is applied by moving to one warehouse? d) Answer (b) if the correlation coefficient of the demand in the two markets is 1 ? (Show your analysis) Al De Niro, the owner of Padria Inc., is a major distributor of a famous new model of a high-end sunglass, which is procured from Italy. Sunglasses are purchased from the manufacturer in Italy at the beginning of the season and are stocked and distributed to the regional department stores at the two warehouses in New York and Los Angeles. Currently, each warehouse operates independently and controls its own stocking decisions. At the end of the season, unsold sunglasses in each outlet are sold to the local discount stores at a deep discount. Consider the following situation regarding a sunglass, which is expected to be in high demand for the upcoming season: Assuming that demand at both markets is Normal, a) Find the optimal quantities to be allocated at each warehouse and the overall average total profit for the season associated with this operation. b) Instead of stocking in two locations, Al is considering stocking this sunglass in only one location, the warehouse in Chicago and satisfy demands for Los Angeles and New York. However, since the sold sunglasses must be shipped from Chicago, the unit transportation cost will increase by an average of $5 per sunglass. Assuming that demands in the two markets are independent, calculate the optimal order quantity for the sunglass and the average total profit for the season associated with this operation. Based on your analysis, should James take this action? c) Which concept of supply chain management is applied by moving to one warehouse? d) Answer (b) if the correlation coefficient of the demand in the two markets is 1 ? (Show your analysis)
